Given the weakness in the Queensland economy in recent months, it’s unsurprising Government revenues have fallen short of forecast levels, and the Government is considering asset sales recommended by Peter Costello’s Commission of Audit, as reported by the Courier-Mail this morning:
A MASSIVE decline in revenues could force the Newman Government to adopt many of the Costello Review’s most controversial recommendations, including asset sales.
The Courier-Mail can reveal the Government’s Budget in June will predict a fiscal deficit for 2013/14 of more than $8 billion, compared to the $4.6 billion estimated in November.
Combined with this year’s deficit of $10 billion, the total red ink racked up by the Government could exceed $18 billion by the middle of next year if no action is taken.
Huge writedowns on stamp duty, royalties and payroll revenue predictions are responsible for the bulk of the state’s fading fiscal fortunes.
The deficit figure comes despite the Government reining in spending by more than $5.5 billion last year by cutting thousands of public servant jobs and cancelling funding for programs.
The Government should sell assets, particularly electricity businesses Energex and Ergon, so it can pay down debt and reduce its interest bill as soon as possible. Trying to repair the budget through further spending cuts, which the Courier-Mail reports is a possibility being explored, would be counter-productive. The State Government exerts a major influence on the Queensland economy, particularly on the construction sector, and further spending cuts would mean the recent economic weakness would continue for many more months, and would actually risk additional declines in revenue if the economy worsens as a result.